Grape trends

The 2009 grape crop was much larger than 2008, increasing by 23%, or nearly 700,000 tons. The increase in the Northern Interior was especially pronounced. The crop on the coast was mixed. Despite current economic conditions, wine sales continue to grow, especially at price points below $10 per bottle, which are sourced primarily from the areas of the Interior that had a large crop, points out Bill Turrentine, president, Turrentine Brokerage, Novato.

Key Points

• Wine sales grew, especially at prices below $10 per bottle.

• Merlot jumped 100,000 tons; increase came from Lodi area.

• Pinot grigio, an Italian varietal, grew 61%, or 9 million gallons.

Merlot move

According to the 2009 Grape Crush Report, merlot jumped 100,000 tons over the light 2008 harvest. Most of that increase came from the Interior regions, especially from the Lodi area. The Central Coast also had a strong recovery after a small 2008 harvest. But many acres of merlot vineyards have been removed since 2005, when the massive merlot crop was almost 100,000 tons more than 2009’s.

“So many acres of merlot have been removed it is surprising that the state produced such a large crop of merlot, a total of over 326,000 tons,” says Turrentine.

While the total was close to the record 2005 crop, it isn’t expected to create the inventory backup that occurred after 2005. “For the most part in the Central Valley and in the value segment, most of the large wineries went in this year with a low of inventory,” John Ciatti, Ciatti Co., San Rafael, says. “There was a lot of capacity that was available too. We didn’t run in with a lot of full tanks. They’re full now, but they were empty going in. We feel this is an opportunity to fuel growth.”

“We didn’t have a lot of inventory because we had three relatively shorter crops before 2009 — so 2009 is going to create bigger issues for the super-premium end,” adds Ciatti’s Glenn Proctor. “Given that we have continued growth in the value segment, we should be able to chew through the inventory.”

Prices down

Prices for wine grapes for 2009 were down 8%. “Many factors went into this pricing decrease — economy, struggling premium wine segment, and larger crop were all factors,” Proctor says. “Over the last few years — wineries have been shortening their contract commitments, and this forced more growers to sell their grapes in the spot market — thus being more subject to market pricing fluctuations.”

“As predicted in an earlier ‘Turrentine Outlook,’ pinot noir, which is still growing rapidly, increased by over 47%, or nearly 3.5 million cases, says Brian Clements, a Turrentine senior partner. “Monterey County, which has seen substantial new plantings of pinot noir vineyards in recent years, overtook Sonoma County as the largest pinot noir-producing region in the state.”

In 2009 newly planted vineyards boosted production for pinot grigio, which is the fastest growing large-white variety in the U.S.

“In great news for consumers, pinot grigio, an Italian varietal that does exceptionally well in California, had a record crop in 2009. Pinot grigio increased by 61%, equal to over 9 million gallons, or over 45 million bottles of finished wine,” adds Clements.

Perspective

Putting the overall tonnage increase in perspective, Steve Fredricks of Turrentine also notes that based on 2008, 2009 appears huge; 2008 was small, however, largely because of frost and water problems.

“Consumers are the winners because it was a large harvest and good quality,” Fredricks adds. “There’s plenty of wine at good prices. Growers in the Interior did well because there’s strong demand for value wines, and they went into harvest with very low inventories of those. Part of the byproduct was some increased importing of wines to satisfy that demand. The exception is chardonnay. We will probably feel some effects from that. On the coast, the crop is going to be tough for wineries and growers — especially for people who didn’t have their grapes under contract.”

Merlot bounce-back

Nielsen Co. research commissioned by Blackstone Winery, Sonoma County, found that merlot has the single-largest consumer base of any varietal wine in the U.S. It remains the second-best-selling red-wine variety in the U.S. behind cabernet sauvignon, and the third-most-popular varietal overall. Despite rumors of the “ ‘Sideways’ effect,” 93% of people who saw the movie say it had no effect on their opinion of merlot.

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GROWTH OPPORTUNITY: For the most part, large Central Valley and value-segment wineries went into 2009 with a low inventory, which should fuel growth, John Ciatti, Ciatti Co., says.

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WHITE TREND: Glasses of sparkling wine await guests at Meadowood Napa Valley. Light and white varieties like pinot grigio increased acreage. Pinot grigio increased by 61%, equal to over 9 million gallons, or 45 million bottles of finished wine.
Napa Valley Vintners photo by Jason Tinacci

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HUGE HARVEST: While the 2009 grape crush total was close to the record 2005 crop, it isn’t expected to create the inventory backup that occurred after 2005.
Photo Courtesy Wine Institute © Copyright Wine Institute

This article published in the March, 2010 edition of CALIFORNIA FARMER.

All rights reserved. Copyright Farm Progress Cos. 2010.